Microsoft Acquires VideoSurf

Setting up its broader digital TV strategy, Microsoft just announced the acquisition of video discovery technology provider VideoSurf.

Per the deal, Microsoft plans to integrate the technology into its entertainment platform, including its Xbox 360 ecosystem, while evolving search and discovery of entertainment content on Xbox LIVE.

“VideoSurf’s content analytics technology will enhance the search and discovery of entertainment content across our platform,” said Alex Garden, director of Xbox LIVE for the Interactive Entertainment Business at Microsoft.

Press reports put the acquisition price at around $70 million, but neither Microsoft or VideoSurf wished to discuss financial terms of the deal on Tuesday.

In the coming months, Microsoft plans to bring about 40 TV and entertainment providers to Xbox LIVE, including Bravo, Comcast, HBO GO, Verizon FiOS and Syfy in the United States.

Founded in 2006, the California-based startup offers a back-end “computer vision” technology, which can “see” frames inside videos for the sake of easier discovery.

The acquisition is also expected to make it easier for Microsoft’s video partners to exploit features, including voice search enabled by Kinect for Xbox 360. This holiday season, Microsoft plans to launch voice search to its entertainment partners on Xbox LIVE.

Over time, Microsoft plans to have content tagged in real-time to increase the speed and relevance of the search results. Strangely missing from Microsoft’s announcement this week was any mention of its search engine Bing, and what role it plays in the company’s video discovery efforts.

Two-year-old Bing is losing nearly a $1 billion a quarter, according to recent reports. Worse still, Microsoft has reportedly lost $5.5 billion on Bing since the search service launched in June 2009, while the software giant has never made money in its online services division.

According to comScore stats released in September, Bing is holding onto a 14.7% share of the search market, while Google continues to dominate with a 65.3% share.